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The state-owned Indian Oil Corporation (IOC) has launched an investigation into allegations that a US-based specialty chemicals company bribed its officials 15 years ago to win contracts for the supply of catalysts.
According to a company disclosure, Albemarle Corporation, a global supplier of specialty chemicals, is accused of paying approximately $1.14 million in commissions to a broker in India between 2009 and 2011. In exchange, the company allegedly obtained about of $11.14 million in profits from its dealings with the IOC during that period, according to a US SEC order dated September 28, 2023.
Albemarle was implicated in bribery by US authorities in 2017 and settled the case in September 2023 by paying a hefty fine of more than $198 million to avoid prosecution.
In its filing, the IOC emphasized that it is not a party to the US SEC proceedings nor is it charged in connection with them. However, the company has initiated an internal review to fully understand the facts surrounding the allegations and determine any necessary actions to take.
The IOC reaffirmed its commitment to the highest standards of governance, transparency and regulatory compliance in all regions in which it operates. The company operates 10 of India’s 22 oil refineries, with a total capacity of 80.8 million tonnes per year, refining crude oil into fuels such as gasoline and diesel. The IOC also controls about 40 percent of the fuel market in India.
“We assure our stakeholders, partners and employees that we are a law-abiding company, which fully complies with all laws,” the company said in the document.
According to the SEC order, an Albemarle consultant and sales agent bribed unnamed decision makers at the IOC between 2009 and 2011, as well as a private sector client between 2009 and 2017. These bribes were allegedly paid to secure orders of catalysts and obtain confidential information, non-public information from Albemarle.
The agent’s involvement came after the IOC threatened to add Albemarle to a “vacation list,” a sanction that would have prohibited the company from conducting future business in India for failing to meet a performance guarantee.
The agent contacted Albemarle staff in the Middle East and said he could help the company avoid the holiday listing issue. Albemarle then hired the agent, despite knowing the high likelihood that the agent used part of his compensation to bribe senior IOC officials, as described in the SEC order.
The agent, whose identity is not revealed in the SEC filing, allegedly claimed that two former senior IOC officials were on its board of directors.
An Albemarle regional director alerted the company’s U.S. sales executive about the possible bribery. He expressed concern that hiring the agent would violate the US Foreign Corrupt Practices Act (FCPA). Despite these warnings, the sales executive signed a retroactive consulting agreement with the agent in August 2009, which provided for a 3 percent commission, three times the rate Albemarle paid its existing agent in India.
Shortly after the agent’s commitment, the threat to add Albemarle to the vacation list was removed.
Between 2009 and 2017, Albemarle also paid excessive agent commissions to secure catalytic converter orders from private clients in India. The SEC found that Albemarle’s corrupt practices extended to obtaining contracts with the IOC and companies in Indonesia and Vietnam, resulting in more than $63.5 million in bribes.
